MITI CONFIRMS MALAYSIA IS READY FOR FTA ROUND 3

C O N F I D E N T I A L KUALA LUMPUR 001910 SIPDIS SIPDIS STATE PASS USTR FOR B. WEISEL AND J. JENSEN COMMERCE FOR 4430/MAC/EAP/J. BAKER TREASURY FOR OASIA L. MOGHTADER E.O. 12958: DECL: 10/12/2015 TAGS: ETRD EFIN EAGR EINV MY SUBJECT: MITI CONFIRMS MALAYSIA IS READY FOR FTA ROUND 3 Classified By: Economic Counselor Colin Helmer for reasons 1.4 (B &D). ¶1. (SBU) Economic officers met October 12 with Jayasiri, Senior Director for Asia-Pacific Economic Affairs at the Ministry of International Trade and Industry (MITI),who confirmed the Malaysian government's readiness to host Round 3 of our FTA negotiations the week of October 30. He indicated that Malaysian negotiators from various ministries were developing responses to the positions the U.S. advanced in the first two rounds. They also have been meeting regularly in inter-ministerial meetings that cover the entire range of issues. The next inter-ministerial meeting will be held October 19. Jayasiri said that Malaysian negotiators would send written responses to their U.S. counterparts following that meeting. Some of these might take the form of bracketed text. He said the Malaysian team is "fully mindful that if we cannot give you counterproposals, then there is no reason for you to come" to Kuala Lumpur for negotiations. ¶2. (C) Econoffs asked about the status of the Cabinet paper, which Malaysian officials previously had indicated was necessary before they could engage in further negotiations. Jayasiri responded that MITI Minister Rafidah had decided there was no need to go back to Cabinet. The mandate the Cabinet gave in December 2005 for the launch of the negotiations remains valid. Jayasiri said Rafidah had briefed Prime Minister Abdullah on the "issues and state of play" and that was deemed sufficient. He also observed that Malaysian negotiators are clearing their positions either with their Ministers or their designees, and that this process obviated the need to consult Ministers as a group. ¶3. (C) Econoffs probed on how deeply MITI's new Secretary General Abdul Rahman Mamat was involved in the inter-ministerial process. Jayasiri responded vaguely, but indicated that Attorney General Abdul Gani Patail is deeply involved. He indicated that the Attorney General's Chambers are reviewing every paper that will be provided to the U.S. team. He also said MITI Deputy Secretary General Ooi Suay Chuan remains actively engaged in the process, even though his portfolio has shifted from trade to industry. ¶4. (C) Comment: We see the turnabout on the Cabinet paper as a move by Rafidah to maintain sole control of the FTA process. In fact, during her meeting with USTR Schwab in August, she said there was no need for another Cabinet review. We discounted this remark at the time in light of detailed explanations from senior MITI officials about the necessity of a fresh political mandate, but we should not have underestimated Malaysia's longest-serving Minister. We accept MITI's judgment that the inter-ministerial process will enable the Malaysian team to engage substantively in the coming round. SHEAR